This word came about for a need to have a racial slur for white people that is as cool as nigger for black people. It does not imply the lameness of honkie or cracker. Instead, a nilla is a white kid, who is both a slave to the freaky ass booty and enjoys chillin with his boys. Note: Nilla's do not act black
What you call white friends and aquantinses, whom are tight as hell with any culture, race. In other words they are not a hater on other people. Non judgmental. Nillas do NOT act black, they are who they are. A cracker is somebody whom is stale salty and judgmental.
Opposed to a black male calling their other black friend or homie; they would say what up nigga. A white person (not necessarily acting black) would call they homies and say hey mynilla! get it?